Resources

Minimum energy efficiency standards

Odyssey July 2016

A reminder for buy-to-let landlords

The Minimum Energy Efficiency Standard (“MEES”) is due to begin to take effect in less than three years. The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 (“the Regulations”) bring the MEES into force stage by stage.

Since April 2016 the Regulations have allowed residential tenants to request landlord consent - not to be unreasonably withheld - to prescribed energy efficiency improvements (unless exemptions apply or the landlord proposes alternative energy efficient measures). Then, from 1 April 2018, the regulations go even further so that it will be unlawful to grant a new or extend or renew an existing residential lease where the property has a sub-standard EPC rating (one of less than “E”). This will be further extended by it becoming unlawful to continue to let an EPC sub-standard residential property on and from 1 April 2020.

Landlords with properties with an EPC rating of less than “E” will have to carry out works to improve energy performance to “E” or above. Failure to do so will result in civil penalties.

The MEES will apply to all residential properties needing an EPC except for those of a listed nature and will affect assured tenancies, assured shorthold tenancies, Rent Act tenancies and any other tenancy specified by an order of the Secretary of State from time to time.

There are however three exemptions allowing landlords to let or (later) continue to let EPC sub-standard properties namely:

Cost effectiveness -Where it has been assessed that the recommended improvements would not pay for themselves over a period of seven years based on energy bill savings.

Third party consent -If a third party such as a lender, freeholder or tenant has the right to prevent works from being carried out without their consent which it refuses or would grant only unreasonably conditionally.

Devaluation of the property- Where the energy efficiency improvements will decrease the market value of the property by more than 5%. This will need to be confirmed by a report from an independent surveyor.

All of the exemptions above will last for up to five years and will need to be pre-registered on the Private Rented Sector (PRS) Exemptions Register in order to be valid. The exemptions cannot however be transferred to a new owner.

Enforcement of the MEES will be carried out by local authorities through Trading Standards Officers. Landlords may be served with a compliance notice requesting information relating to the EPC rating of the property. If the information is not provided or does not comply with the MEES a penalty notice will be issued.

Landlords should carry out assessments of their properties in order to determine which properties are likely to fall below the minimum “E” rating and investigate what improvements are available to raise the energy efficiency rating.

Prettys can advise landlords and tenants when committing to leases on the legal impact of the MEE.